Immigrants impact California’s real estate profession

A large population of international immigrants have the potential to give California’s homeownership rate the boost needed to catch up with the rest of the country. It all starts with positive immigration reform.

Immigration reform for growth

Beginning January 1, 2016, the California Bureau of Real Estate (CalBRE) will allow individuals to become licensed real estate agents and brokers, regardless of their immigration or citizenship status. This change in licensing law comes along with many other immigrant-friendly laws in California.

California is one of:

ten states which allows individuals to apply for driver licenses, regardless of immigration status;

20 states which allows unauthorized immigrants to attend college at in-state tuition rates;

15 states which supports President Obama’s executive action to give work permits to four million unauthorized immigrants (1.2 million in California), protecting them from deportation, according to the New York Times; and

three states which prohibits a law enforcement official from detaining someone (once charges have been dropped or bail has been posted) due to a S. immigration policy unless they have committed specific crimes. This allows law enforcement to focus on dangerous criminals instead of unauthorized immigrants, according to the Immigration Legal Resource Center. [Calif. Government Code §7282]

To obtain their real estate license, each applicant will need either a Social Security number (reserved for U.S. citizens) or an individual tax identification number (ITIN). They are also required to fulfill all licensing education requirements.

Reform opens the doors to homeownership

Authorizing undocumented immigrants to act as licensed real estate agents is a positive step for California’s homeownership rate, which is at 54.4% in the second quarter of 2015. This is well below the 63.3% average U.S. homeownership rate. However, with more than 6% of California’s population and 9.4% of workers consisting of unauthorized immigrants (according to the Public Policy Institute of California) our low homeownership rate makes some sense.

Consider a gainfully employed individual who has the desire and means to become a homeowner, but who is an undocumented immigrant. The run-of-the-mill real estate agent is unlikely to know how to help this individual overcome the unique barriers placed between them and homeownership due to their immigration status. However, an agent who is personally familiar with these obstacles is most suitable to assist qualified, unauthorized immigrant homebuyers.

Areas where unauthorized immigrants make up a significant share of the population will likely see a larger boost in homeownership in the coming years. Take a look at this map by the Public Policy Institute of California, which shows the highest share of unauthorized immigrants concentrated in central California:

However, as far as pure numbers go, Los Angeles County has the largest population of unauthorized immigrants, at 815,000 as of 2013. Orange County is a distant second, followed by Santa Clara and San Diego counties.

Many unauthorized immigrant families are cut off from the possibility of homeownership due to:

being unaware of their ability to buy a home in California without a social security number;

being too worried about deportation to apply for a mortgage; or

having insufficient access to funds.

However, with access to a licensed real estate agent who is also an unauthorized immigrant, some of these obstacles may be more easily navigated and overcome.

Immigrant homeowners: a success story for everyone

The homeownership rate amongst this population increases further when pathways are created for unauthorized immigrants to become citizens. The NAHREP report claims residential construction spending has the potential to increase by $68 billion annually over the next 20 years — with proper immigration reform. This may have even more of an impact on the housing market, since unauthorized immigrant workers hold a disproportionate number of jobs in the construction industry, according to the Public Policy Center of California.

As for real estate sales transactions, immigrants who have been able to become U.S. citizens have the potential to contribute $180 billion in real estate costs, which leads to a correlated increase in consumer spending, according to NAHREP.

All of this spending can be great for the economy — if it has a chance to happen, of course. The NAHREP report and the Bipartisan Policy Center claim future immigration reform has the potential to:

reduce the cumulative federal deficit by $570 billion;

grow the U.S. labor force by 8.4 million without taking away from average worker wages;

increase economic growth by 4.8%; and

increase gross domestic product (GDP) by 0.5%.

On the other hand, stifling immigrant access to legal employment and citizenship is expected to have the opposite effect, by:

increasing the federal deficit by $100 billion; and

reducing GDP by 1.5%.

For the housing market, this translates directly to more transactions and eventually more single-family residential (SFR) construction.

Your thoughts on immigration

In a 2013 poll of first tuesday readers, just under half of respondents said immigration reform will make a positive impact on California’s housing market. One-third of readers said it will make a negative impact and one-fifth said it will have no effect.

Now that 2015 is here and immigration reform continues to progress, what are your thoughts on immigration’s influence on the housing market?

What kind of impact will immigration reform have on the California housing market?

23 Comments

Fer Jar
on May 8, 2016 at 7:39 pm

Bu hu hu!!! I’m one that will benefit from this opportunity and I will be taking your commissions you whinning greedy narrow minded R.E. agents complaining here. I’ve always said competition makes any business better so buckle up cause any person from anywhere in this beautiful world (not just from the southern border) with dreams, determination and goals and will take your next commission check by focusing on what you are not!! Sell sell sell!!! Pound the pavement and grind!!! Eventually you will get over it when you understand we all deserve a chance to prosper like your immigrant families did decades ago. Get with it or become a statistic years from now when you read a survey showing how successful new ITIN agents became. Embrace the competition.

The SBA has been actively pursuing loan origination with undocumenteds for more that 30 years; financing all kinds of properties: gas stations, restaurants, mobile food service unites, “roach coaches”, retail properties, etc. This activity went gang-busters during Clinton years. As an SBA stringer, I was assigned to make application for a few such applicants.

Although the article didn’t state it, I sense the comments presume the illegal immigrants are Hispanic and with little education or few employable skills. This seems like an unnecessarily broad brush. Might there also be many Asians that entire our country illegally? How about the refugees currently running away from the Middle East and North Africa? As for education, I don’t imagine this was an issue when the flood of Irish or Eastern Europeans arrived. Besides, aren’t there many people working in Silicon Valley who are non-legal status foreigners? The issues may remain the same, but it just feels wrong to apply such a general profile to the non-legal immigrants.

What the heck I work with a lot of Hispanics over the years and all that I worked with were good clients. I treated them just like I treated all my clients sold them homes they could afford for their families. I have a lender that does Daca loans, but if they’re ileagal and don’t have a good social security number they can’t buy I would like to know who does Itin numbers loans as that would be great. Who approved this for illegals to get Real Estate licenses that are illegal no way they committed a lot of Fraud last time that’s not right. Now for all of us that work hard are citizens educated and have earned our rights and paid our dues to sell Real Estate and then your going to further cut into our income with illegals who don’t understand honesty fairness and integrity and now your going to give them a license to Steal this is wrong on so many levels who approved this vote I certainly wasn’t asked. Who do I protest to.

Why do you feel so threatened by this law? How are illegals going to “cut” into your income? Do you feel threaten that we might actually be more capable of selling real estate than you? Don’t be afraid of a little competition now. You’re nobody to downplay the significance of this law coming into place. You’re basically saying all illegals are dishonest with no integrity when all we want is an opportunity to prove ourselves. To prove that we didn’t come to this country to become criminals like most of you think we did I graduated HS with honors, went to college and graduated with Honors (No Loans, no FAFSA) So as far as my “education”, I think I’m in the right to say that not all illegal immigrants are out there to cause trouble. I pay my taxes under my ITIN number right now and with this law coming into play, I will be able to obtain my Real Estate license, establish my real estate business and become a successful real estate entrepreneur. Maybe even do a little investing, who knows. My point is, there is absolutely nothing you or anyone can do to stop this from happening. If you want to protest, send a letter directly to Jerry Brown. I’m sure he’ll have a ball reading all your sentence fragments, mispelling, & grammatical errors.

Wow! So much for your Honors in HS. It’s very simple, it is a Federal Crime to gain access to the US Illegally…hence those who do are CRIMINALS. Got it? Can you understand how dumb your comments are? Scared!

Well some of the undocumented people , may will have a good pay job and may even have some savings , after all I think, some or many of them may be thinking to buy a home specially ,if the wife is working to, and they both having kids It’s positive !

It’s a fact that Hispanics that don’t speak English are ripped off by other Hispanics that do speak the language and take advantage of them. This will only expand the abuse undocumented immigrants are target of.

The cost of California housing is again going through the roof. Allowing ILLEGAL ALIENS to purchase homes in California will compete with LEAGAL U.S. citizens and force the price of homes up even more. We don’t have enough homes for those who are legally in California. Not to mention that we don’t have the infrastructure and water for them. What we need is a moratorium on the building of new homes, apartments, etc., until our drought is over. Face it people….not everyone who wants to can live in California. This is a country of LAWS and like it or not it is the RESPONSIBILITY of everyone here to abide by them. Try to purchase a home in Mexico! It wasn’t that long ago when the Mexican government sent the military to force American homeowners out of their homes because they purchased them in good faith, not knowing that anywhere near the coast Americans CANNOT own real estate I Mexico.

It is outrageous that foreigners come to our country ILLEGALLY, mooch off of us for free education and lots of other benefits, and are rewarded by our government–both Democrats and Republicans–for their own selfish interests. Giving business licenses to ILLEGAL immigrants disgusts me. This is a business built on honesty and trust. How can you respect or trust people whose first contact with this country is to break our laws? And California is overcrowded and running out of space and water. I am totally opposed to giving any benefits at all to CHEATERS!!!

All of you commenting in a negative way,You should be afraid because there are millions of us illegal immigrants here to take back land that you stole from us and yes the ones against this law that are generalizing all illegals as criminals we will show you by slowly taking over your jobs because all of you that seem scared are because we do a better job than all of you bickering it’s funny some of you commenting have Spanish last names you should be ashamed of yourselves!! If you concentrate more on yourselves on being better at what you do maybe you would be confident and not worry we will take your job

What part of ILLEGAL does the state of California not understand? Allowing ILLEGAL aliens to obtain a real estate license so that they may compete with legal citizens is so, so wrong. Further allowing ILLEGAL aliens to obtain home ownership may be good for lining the pockets of legal license holders but what happens when these people do end up being deported? Do we as tax payers end up buying them out?
If any of us trespass into another country, will that country roll over and let any of us obtain these kinds perks, I think NOT.

How does the CA. BRE plan to do background checks before granting licenses to the illegal salespeople and Brokers.? How can they check whether or not they have commited crimes in the countries from which they have come.? Brokers and Salespersons are privy to much sensitive material. That is why they are fingerprinted and background checks done on those who are here legally before a license is granted.

I don’t see how licensing undocumented immigrants to assist undocumented homebuyers will solve the issue of homeownership. The reason the percentage of homeownership is low is because there are not enough banks and programs that can help them. Very few people can come up with 10% down and buy with an 8% to 9% interest rate. So real estate agents have very little impact…and it’s not for lack of knowledge or inability to identify their need.

To give incentive to people who disrespect our immigration laws (sovereign rights) is tantamount to societal suicide. Yes, we need more bodies to produce and consume for a healthy economy, but not at the expense of those of us who abide by the laws and most importantly to those who migrate here LEGALLY. Our southern border is not a revolving door for any peasant to pass through and expect a handout, a job, or amnesty.
This notion that illegal aliens benefit the economy is absurd. Study after study as proven that by the time these people are run through the public assistance process for two or three generations, the net effect is a huge cost for taxpayers.
Reform will only happen when there is a STRONG consensus and construct toward securing the border first.

Michael Ryan, remember that the Hispanic Immigrants are now the largest minority group in the entire country, with tremendous amount of buying power which has helped our economy. Now just imagine for a moment what impact our economy is going to have with Immigration reform. May I remind you that this great country of ours was, is and will continue to grow due to our Immigrant population. God Bless America The Beautiful!!!! I’m proud to be an American, although I was born in Mexico.

klesb Mike, you have identified the problem well. Democrats in government are anxiously trying to apply their economic theories to issues that require market based solutions... – Los Angeles rental crisis continues in 2019

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